Executive Covets Goldman Seat Where a Friend Snugly Sits

Inside Goldman Sachs, Gary D. Cohn is the man who is waiting — and waiting — to be king.

He has long been considered the heir apparent of Lloyd C. Blankfein, who has been the chairman and chief executive of the elite Wall Street firm since 2006. But Mr. Blankfein has shown few signs that he is ready to step aside, Goldman insiders say.

After steering the firm through the financial crisis and surviving a firestorm over allegations that Goldman had bet against its own clients, Mr. Blankfein, 58, now appears to be enjoying himself. He has become an elder statesman of finance. But unlike past Goldman chieftains, he is not widely talked about as a candidate for a high-level job in Washington.

Goldman Sachs is among the Wall Street banks driving the market higher during this remarkable rally, with Gary Cohn, Goldman Sachs president & COO, and CNBC's Steve Liesman.

So Mr. Blankfein has regrown a beard and come to embrace the limelight, giving speeches on gay marriage and education, and attending celebrity Oscar parties. He often jokes that he plans to die at his desk.

It is no laughing matter for Mr. Cohn, who as Goldman's 52-year-old president is the Prince Charles of Wall Street, a man for whom the crown seems just beyond his grasp. Mr. Cohn is growing increasingly restless, according to friends and colleagues. Some inside Goldman wonder if he will depart if Mr. Blankfein doesn't move soon. That would throw a monkey wrench into Goldman's succession plans, leaving the firm without a natural candidate ready to replace Mr. Blankfein.

It is perhaps no accident that whispers of Mr. Cohn's restlessness are now being heard outside the firm's gleaming Battery Park tower. A lot is riding on the studied dance of money, power and persuasion that Mr. Blankfein and Mr. Cohn are engaged in.

"You can't understate the importance of the person who runs Goldman," said Michael J. Driscoll, a former senior trader at Bear Stearns who now teaches at Adelphi University. "The head of Goldman is the de facto head of Wall Street."

The dance between the two executives is made more intriguing by the lack of visible tension between them. By their own accounts, the two men are friends. For years, their families vacationed together, and Mr. Cohn recently attended the wedding of Mr. Blankfein's eldest son.

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But this is Goldman Sachs, a firm known for a focused ruthlessness in every trade and every deal, a place where ambition can be as outsize as the compensation. It is a firm that is no stranger to Machiavellian power plays: Mr. Blankfein's predecessor, Henry M. Paulson Jr., who was later Treasury secretary, became chief executive in what was effectively a coup against his counterpart, Jon S. Corzine, who later entered New Jersey politics.

While Mr. Cohn is still the front-runner to succeed Mr. Blankfein, time is not his friend. The firm will continue to groom other contenders, increasing the chances that the leadership baton could be passed to one of them and not to Mr. Cohn.

The leading candidates to take over from Mr. Blankfein should Mr. Cohn leave or be passed over are Harvey M. Schwartz, Goldman's chief financial officer, and its investment banking co-chief, David M. Solomon, according to people briefed on the firm's succession plans. But neither man is currently being groomed for the top job.

A spokesman for the firm said: "We are pleased to have a very strong and stable leadership team with decades of experience at the firm. Eighteen of the 30 members of our management committee have been at Goldman Sachs for at least 20 years."

Regardless of the outcome, the power dynamic at the top of Goldman, the world's most profitable investment bank, is intensely watched within the firm because it can make or break the careers of a number of professionals.

The rumblings emerging from Goldman's headquarters come during a long period of stability at the top. At the same time, some of its rivals have experienced upheaval. Over the last 12 months, a number of senior managers have left JPMorgan Chase, while Citigroup ousted its chief executive.

At Goldman, no such exodus is envisioned, but there is the challenge of keeping restless senior executives happy.

It is a particularly nettlesome problem for someone like Mr. Cohn, who has publicly said that he wants Mr. Blankfein's job. Mr. Cohn is responsible for the firm's day-to-day operations and is, by many accounts, very engaged despite his impatience. Mr. Cohn also helped navigate Goldman through the financial crisis. For those efforts, he has earned nearly $128 million since 2007, according to Equilar, a compensation data firm.

Still, it is almost certain that Mr. Cohn, who got his start as a metals trader, could make more money working at a hedge fund. Such a move, while tempting, would almost certainly come with less power than the job he wants at Goldman. As a result, some people inside Goldman feel that Mr. Cohn is not serious about leaving anytime soon.

For his part, Mr. Blankfein appears to have no great incentive to leave. A number of former top Goldman executives, including Mr. Paulson, Mr. Corzine and Robert E. Rubin, fashioned second careers out of government service. Yet Mr. Blankfein himself has acknowledged that a government post is an unlikely option, given the beating that he and other Wall Street bankers took during and after the financial crisis.

It wasn't long ago that most of Wall Street wouldn't have given Mr. Blankfein strong odds of survival. On his watch, Goldman was accused of defrauding investors and paid $550 million to settle the allegations. Mr. Cohn, a native of Shaker Heights, Ohio, is cut broadly from the same cloth as Mr. Blankfein. Should he get the top job, it would break an unstated tradition at the firm of passing the top job from a trader to a banker, as both men hail from the trading side of the business. Under their leadership, the business has tilted from advising and underwriting for corporate clients to emphasizing trading.

Mr. Cohn got his start at New York's commodities exchange in 1983. He became known as "gum guy" because his job included holding the chewing gum needed to wet the throats of screaming traders. Soon, he began trading silver with his own capital, a job he had until Goldman came calling in 1990.

He took a pay cut for the opportunity to trade metals at Goldman, and struck up a close friendship with Mr. Blankfein. Over the years Mr. Cohn followed Mr. Blankfein up the corporate ladder, becoming co-president and co-chief operating officer when Mr. Blankfein became chief.

The men are both part of the Manhattan elite. Mr. Blankfein lives on Central Park West, while Mr. Cohn and his wife, an artist, live on the Upper East Side. Mr. Cohn, who has three daughters, also owns a house in the Hamptons not far from Mr. Blankfein's home.

"All his frustrations aside, Gary has joked to me that he can see why Lloyd doesn't leave," said a friend who asked not to be named. "The two men really do both love what they do."